By: Pej Hamidi
Apple (AAPL) – Some technicians know not to anticipate a pattern, especially this one. At this point, the H&S pattern you are looking at can technically be a massive consolidation pattern where float changes hands, which makes it look like she’s topping out but buyers are carrying the slack. On the other hand, it could be an early warning that Apple, and hence the Q’s and big cap tech, are headed for a pullback. If this pattern is a top, and that’s a big if, the implied first measurement is $165 to $170. Most unnerving is the sharp spike in volume on Tuesday’s selling.
Of the 17 data sets this chart presents, there is only 1 that is bullish, and that’s money flow, which has been diverging the past 4 days. One saving grace for the bulls, which I have not illustrated, is that by default, the right shoulder of this pattern always emerges as a symmetrical triangle. And by default, if prices squeeze past the 2/3 mark approaching the apex where the two points meet, then equilibrium between buyers and sellers has been achieved and prices will flat line. So there could be a big break in either direction; or there could be nothing, just a flat line. Perhaps a head fake below the 100-day Exponential Moving Average at $195 to clear out some stops, followed by a sharp reversal maybe? This should be interesting to watch over the next few days. And forget you not; AAPL has a huge impact on the market. Where AAPL goes, so goes the market. For now.
